Institutional Crypto Demand Wanes as Futures Enter Backwardation, JPMorgan Warns
A recent report from JPMorgan (JPM) signals weakening demand for cryptocurrencies, with bitcoin (BTC) and ether (ETH) futures showing bearish signs.
The bank highlighted that both BTC and ETH futures on the CME have slipped into backwardation—a condition where futures prices trade below the spot market—suggesting reduced interest from institutional investors.
“This shift is a negative indicator, reflecting a slowdown in demand from institutional players relying on CME futures for crypto exposure,” wrote analysts led by Nikolaos Panigirtzoglou.
In strong markets, futures contracts typically trade at a premium (contango), but the current trend suggests softer price expectations.
JPMorgan analysts also noted that while the Trump administration’s crypto-friendly policies could be a tailwind, their effects are unlikely to be felt until later in the year. For now, the market remains weighed down by profit-taking and limited short-term catalysts.
Additionally, the report pointed to declining participation from momentum-driven funds and systematic traders, further dampening BTC and ETH futures activity.
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